Smith & Nephew slips on Medtronic-Covidien deal
Monday 16 June 2014
Shares in Smith & Nephew fell more than 2.5 per cent after a potential American suitor agreed to buy Irish firm Covidien for $43 billion (£25 billion).
The Medtronic-Covidien deal is being driven partly by tax reasons as the US medical-device giant plans to relocate its headquarters to Ireland to slash its bill. The controversial move has been dubbed a “tax inversion”, and European and US regulators are considering moves to clamp down on the practice as soon as next year.
Traders have sent shares in Smith & Nephew up 20 per cent in recent months because its UK tax base could make it attractive to bidders amid a frenzy of takeover speculation in the sector.
American drugs giant Pfizer tried unsuccessfully to buy British’s AstraZeneca last month in another bid that was widely seen as being driven by tax. However, firms in the pharma and medical sector also want to merge to save cost as patents expire and governments cut budgets.
Jefferies analyst Raj Denhoy reckoned Medtronic could cut 2-3 per cent off its tax rate, pointing to Covidien’s rate of 16 per cent against Medtronic’s present 18 per cent rate.
Medtronic chief executive Omar Ishrak insisted reducing tax was not his prime consideration for the Covidien takeover.
“The real purpose of this, in the end, is strategic, both in the intermediate term and the long term,” he said.
The takeover should save $850 million a year in “synergies”. Medtronic makes heart devices, spinal implants, insulin pumps and other products in areas such as weight-loss surgery, while Covidien designs devices used in a range of surgical procedures.
Smith & Nephew has a stock-market value of £9.5 billion. Its shares fell 26p to 1044.5p.
- 1 Keira Knightley topless: Usually conservative actress does own take on #Freethenipple campaign for Interview Magazine
- 2 Oil tanker with $100 million cargo goes missing off Texas coast
- 3 George Galloway left with severe bruising after attack in Notting Hill by man 'shouting about the Holocaust'
- 4 A teacher speaks out: 'I'm effectively being forced out of a career that I wanted to love'
- 5 Lady al-Qa’ida: On the trail of Dr Aafia Siddiqui, the world’s most wanted prisoner
YouTube video posted by Isis militants shows 'execution of 250 Syrian soldiers'
Keira Knightley topless: Usually conservative actress does own take on #Freethenipple campaign for Interview Magazine
Oil tanker with $100 million cargo goes missing off Texas coast
George Galloway left with severe bruising after attack in Notting Hill by man 'shouting about the Holocaust'
A teacher speaks out: 'I'm effectively being forced out of a career that I wanted to love'
Robin Williams Emmys tribute led by Billy Crystal criticised for including 'racist' joke about Muslim woman
The Rotherham child abuse scandal is a tale of apologists, misogyny and double standards
What do immigrants really think of Britain? Polish immigrant's Reddit post goes viral
Scottish independence TV debate: Pumped-up Alex Salmond bounces back in bruising second round against Alistair Darling
Do you realise just how foolish the UK looks?
With Douglas Carswell joining Ukip, my party has taken another giant step forward
- < Previous
- Next >
iJobs Money & Business
Highly Attractive Salary: Austen Lloyd: BRISTOL - This is a very unusual law c...
£35000 per annum: Harrington Starr: Network Engineer (CCNP, CCNA, Linux, OSPF,...
£50000 per annum: Harrington Starr: DevOps Engineer (Systems Administration, L...
£60000 - £70000 per annum: Harrington Starr: A prestigious leading professiona...